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ch1 notes - Overview of Financial Markets Financial markets...

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Overview of Financial Markets Financial markets – structures through which funds flow (2 major dimensions: primary v. Primary markets – users raise funds through new issues of financial instruments, do not have sufficient internally generated funds issue securities in the external primary markets o Most are arranged through investment banks, intermediary provides security issuer with advice and attracts initial public purchasers – less risk and cost of creating market on their own o Private placement – find institutional buyer (pension fund), most illiquid securities o IPOs (initial public offering) – issues of equity by firms initially going public o “spinning” – underwriters allocated hot IPO issues to directors of potential investment banking clients in exchange for investment banking business Secondary markets – market where securities are traded (rebought and resold) o Buyers are economic agents with excess funds and sellers are those in need of funds o Traded with help of securities broker o Benefits for investors: trade quickly and purchase with varying risk return
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This note was uploaded on 11/30/2011 for the course FIN 308 taught by Professor Spivey during the Spring '08 term at Clemson.

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ch1 notes - Overview of Financial Markets Financial markets...

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